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HudBay Minerals earnings tumble into the red

Keywords: Tags  HudBay Minerals, earnings report, copper, zinc, silver, David Garofalo, 777 mine, Reed mine Constancia project


NEW YORK — HudBay Minerals Inc. fell into the red in the fourth quarter due in part to lower copper and zinc sales.

The Toronto-based zinc, copper and precious metals mining company attributed a drop in revenue to "lower inventory balances on hand in 2013 resulting in lower copper and zinc sales volumes compared to the fourth quarter of 2012," while also noting that "copper production was below expectations in the fourth quarter."

Copper sales totaled 16.7 million pounds in the fourth quarter, down 29 percent from 23.6 million pounds in the same period a year earlier.

"Grades mined at 777 (copper-zinc mine in Manitoba) were affected by the deferral of higher-grade zones from the 2013 mine plan to future years as a result of temporary limitations in paste backfill availability and requirements for ground support in the higher-grade zones," the company said Feb. 19 in its earnings report. "While rehabilitation work will continue in 2014, HudBay remains on track to achieve full-year 2014 metals production and cost guidance."

Overall mine operating costs in the fourth quarter increased 15 percent from a year earlier due to rehabilitation work at the 777 Mine and higher production costs at the Lalor gold-zinc-copper project in Manitoba, but HudBay said it expects Lalor costs to decrease in the second half of this year when the project is commissioned and the production rate is doubled.

Meanwhile, the Reed copper project in Manitoba is on track to reach commercial production by the second quarter of 2014, while the Constancia copper project in Peru also is on schedule to begin pre-stripping late in the first quarter of 2014 and commercial production in the second quarter of 2015. Constancia’s development was more than 56-percent complete as of Dec. 31.

The company also outlined its plans to acquire the outstanding common shares of Vancouver, British Columbia-based Augusta Resource Corp. (amm.com, Feb. 12) as part of "the next phase of HudBay’s growth." The company already owns a 16-percent stake in Augusta, which operates the undeveloped Rosemont copper project in southern Arizona.

"We view Augusta’s Rosemont project as an attractive complement to our existing portfolio of high-quality, long-life assets that fits well with our construction timeline at Constancia," HudBay president and chief executive officer David Garofalo said in a statement.


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